December 10, 2010

I recently had a conversation with a McDonald's Operator who also worked in the McDonald's franchising department in the 1980s. We were remembering the implementation of the "25% Down" policy for Operators who open new or buy existing McDonald's stores.

This policy had multiple purposes but the most publicly discussed was to give the buyer some flexibility if the business took a down -turn for any reason (impact, road closure, local economy, etc.).

Is that same concern alive today? Store resale values have been decimated by mandated rebuilding but when Operators are forced into borrowing million$ to remodel or rebuild McDonald's real estate ... is it all based on rosy projections or does anyone worry about possible hard times?

We usually think of this kind of possibility as a threat to smaller Operators but Operators with a large number of stores are at risk because of the number of concurrent capital projects.

December 2, 2010

Since I'm one of the few people (outside ofOak Brook IL) who knows anything about theunderground real estate and finance arm ofMcDonald's Corporation I found the news that broke this week both interesting and amusing.

In articles such as THIS ONE it was reportedthat McDonald's was a recipient of governmentfunds in the Federal Reserve’s emergency lending during the financial crisis.

Oak Brook was quick to release a statementsaying:

“McDonald’s Corporation was erroneously listed by the Federal Reserve Bank as a recipient of federal funds during the financial crisis of 2008.McDonald's Corporation did not issue commercial paper as a participant in the Commercial Paper Funding Facility(CPFF). We believe the reason for the error is that McDonald’s Corporation is inaccurately listed as the parent/sponsor company of Golden Funding Corporation, an independently-owned company which did receive federal funding during this period.”

Well...that's not entirely true. At least not to thoseof us who refuse to consider the major suppliers toMcDonald's "independent companies". Golden Funding isGolden Mac and is one arm of the vast System Capital Corporation empire set up in the 1990s by McDonald'sand six of the major suppliers.

I find it entertaining to see how nervous Oak Brook gets when anyone asks about what System Capital owns or what it does.